By Leslie Scism and Emily Glazer
Prudential Financial Inc. on Monday said it would suspend distributing insurance policies through Wells Fargo &
Co., following the sales-practices scandal that hit the San Francisco bank.
Prudential’s decision comes as Wells Fargo continues to deal with the fallout from the sales tactics scandal this
fall. Federal regulators and the Los Angeles City Attorney’s office announced in September that Wells Fargo opened as
many as 2.1 million deposit and credit-card accounts without customers’ knowledge. The company was slapped with a $185
million fine for “widespread illegal” sales practices, and John Stumpf stepped down as chief executive.
A Wells Fargo spokesman said it is working with Prudential to investigate any unauthorized or inappropriate
referrals that may have occurred. The spokesman, Mark Folk, added that the bank is suspending sales and referrals of the
MyTerm product until the investigation is concluded.
“We take any allegations of improper sales practices seriously, and if improper conduct is found, we take action
and make things right with customers,” he said in a statement.
Steve Pelletier, chief operating officer of Prudential’s U.S. businesses, said that “if any Wells Fargo MyTerm
customers have concerns about the way in which the product was purchased, we will reimburse the full amount of the
premiums they paid and cancel the policy.”
Prudential said it surveyed Wells Fargo customers last year about their experience with MyTerm, including reasons
why some of them allowed the product to lapse. Those responses didn’t indicate potential fraudulent activity, but in a
statement Prudential said that “following the revelations about Wells Fargo’s sales practices this fall,” the company
expanded its review into how the product was sold.
In a memo to employees Monday, Mr. Pelletier said that three individuals who last week filed a wrongful-dismissal
suit against the insurer in state court in New Jersey in connection with the Wells Fargo sales had been “brought in
after the review was already under way to assist in gathering facts, and that review continues.”
He added that “these employees were dismissed in response to an entirely unrelated ethics complaint filed against
them by individuals who were in no way involved in the Wells Fargo review.”
The three employees alleged in the lawsuit they were dismissed as retaliation for pushing internally for a more-
aggressive approach to making right by the MyTerm policyholders than Prudential was taking.
Prudential is facing at least one purported class-action lawsuit in the matter in a complaint filed in federal
court in New Jersey on Monday. The lead plaintiff is a Wells Fargo account holder in Arizona who alleges he learned he
owned a Prudential policy in October when he got a letter from the insurer that his premium was past due.
“Prudential believes the lawsuit is totally without merit and will vigorously defend itself in the appropriate
legal venue,” a spokesman said.
Prudential has sold about 15,000 policies through Wells Fargo branches since the effort was launched in 2014,and
total premiums from those policies represent less than 1% of the insurer’s total U.S. life premiums, according to the
The Newark, N.J., company’s push to sell policies through bank branches is part of an industrywide effort to
reverse a long slide in sales of life insurance to the middle class. Prudential and numerous other insurers are seeking
to reach people as cost-effectively as possible, rather than through the agents who used to sell policies over
conversations at the kitchen table. MetLife Inc. experimented for a while with touch-screen-equipped kiosks at hundreds
of Wal-Mart Stores Inc.
Wells Fargo has been working to bolster its insurance division over the last 18 months or so, aiming to build off
relationships the bank has with middle-market clients.
Current and former employees interviewed by The Wall Street Journal about the bank’s sales practices in recent
months have said there was an intensity to cross-sell insurance given the bank’s aims to grow the business. In March
2015 it named an executive into a new position: head of the National Cross Sell team for the insurance unit, in efforts
to better sell the bank’s products and services across different divisions to boost profits.
In a spring 2015 interview, Wells Fargo insurance head Laura Schupbach said the bank is leveraging its leading
position as a mortgage lender to help sell homeowners’ insurance.
Wells Fargo is one of the biggest players in insurance among banks. The division, with about 5,000 employees across
the country, writes or places around $11 billion in risk premiums annually in property, casualty, benefits,
international, personal lines and life products.
The division makes up 3% of the bank’s revenues, down from 4% in the year-earlier period after the bank sold its
large crop insurance business to Zurich Insurance.
Write to Leslie Scism at email@example.com and Emily Glazer at firstname.lastname@example.org
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